Posted!

Join the Conversation

This conversation is moderated according to USA TODAY's
community rules.
Please read the rules before joining the discussion.

5 things to watch in Southwest Florida's new housing market

Fort Myers News-Press
Published 2:07 p.m. ET July 6, 2018

Buy Photo

A view of Coralina Apartments in November, when it was under construction in Cape Coral on Pine Island Road just east of Burnt Store Road. Southwest Florida has a growing apartment market, with developers building complexes with luxury amenities and nicer finishes and in prime locations.(Photo: Ricardo Rolon / The News-Press)Buy Photo

Southwest Florida’s housing market has come a long way over the past decade, but the amount of foreclosure activity regionally and statewide may be surprising. A review of foreclosure activity for the first six months of 2017 shows steady declines in Florida, while eight states have seen such activity rise.
Wochit

1. Building permits are still rising

Permits issued for new home construction continue to rally beyond expectations, but far from the exorbitant boom that occurred prior to the last market downturn. Demand for new housing was supported by relatively low resale home inventory, low interest rates, and a surge of demand for value-oriented first-time, first-moveup purchases. Millennials that hadn’t entered the housing market over the last decade are now starting to have families and entering the new home arena.

Buy Photo

Randy Thibaut of Land Solutions Inc. leads a real estate presentation in February during The News-Press Market Watch event at Germain Arena in Estero. Thibaut is one of three area real estate experts who shares insights on the Southwest Florida market.(Photo: Kinfay Moroti/news-press.com)

2. Challenges for affordable housing

The $200,000 new single family home may be over, with a few exceptions, due to high building costs, particularly materials and labor. Even if the pace of home sales increases, many builders will be challenged to keep up due to a shortage of qualified labor. Impact fees need to remain low to help keep new home prices affordable. Rising interest rates are another factor that will put the squeeze on purchasing power. Because of this, we may see a decrease in new home purchases by early 2019.

Entrada's sale to DR Horton for $20 million was one of the top 10 commercial real estate transactions of 2016 in Lee County.(Photo: Lee County Property Appraiser)

3. Record setting land deals reminiscent of the 2004-2007 era are setting the stage for future growth

Homebuilders have their sights on major projects such as WildBlue and CenterPlace off Alico Road, east of I-75. Developed lot inventory appears to be dwindling, fueling short-to-mid-term demand by builders. Builders have their eyes on east Fort Myers, North Fort Myers, and Port Charlotte, seeking sites suitable for value-oriented housing.

Steady growth contradicts expectations that new apartment development would slow down in 2018 with concern of overbuilding. A number of new rental projects have been funded over the past few months while vacancy remains low and rental rates remain higher. Will these fundamentals change as more new inventory becomes available? That is something to watch.

With the recent elimination of the state income tax deduction, many who live in high income tax states are switching their primary residence to Florida and making their move sooner than originally planned. Over the coming years, we believe housing and jobs will be positively impacted here in Florida relative to the rest of the country.

Randy Thibaut is CEO of Land Solutions Inc. and one of The News-Press Market Watch presenters. Contact him at rthibaut@landsolutions.net.

The News-Press Market Watch(Photo: Archive)

Randy Thibaut is CEO of Land Solutions Inc. and one of The News-Press Market Watch presenters.